The present invention is a self-contained, reusable, electronic label device attached to merchandise for the purpose of security, surveillance, pricing, tracking, accounting and inventory control. The device is used to deter employee theft and shoplifting. Additional apparatus provides a management tool for updating labels, inventory and operations control.
In retailing merchandise to the general public, loss of merchandise through employee theft and shoplifting is sometimes referred to as "shrinkage". It is estimated by the United States Chamber of Commerce that internal losses due to employee theft in the United States amount to at least $40 billion annually. Shoplifting by consumers is estimated at $30 billion annually. These losses result in higher merchandise prices to the consumer and large expenditures for loss prevention by manufacturers, distributors and retailers alike.
There are many types of employee theft. Theft is accomplished through manipulation of paperwork, particularly when a non-computerized or a partially-computerized accounting system exists. Receiving reports get submitted to accounts payable for merchandise never received and checks are made payable to fictitious suppliers. Physical inventory counts get "lost" and result in shortages. Merchandise pricing gets "reduced" at the point of sale for friends. Several "not paid for items" get included in a "friend's" bag of purchases. Employees locking up at night after the store closes take home merchandise after the exit alarm detectors are off, or they go through non-alarmed doors. Organized scams between retail employees and merchandise suppliers operate unchecked. Stolen merchandise gets "returned", with or without a sales slip, regardless of whether the merchandise even matches the sales slip. Merchandise is put into trash and picked up outside the store in the dumpster that night. Clerks can underring a cash sale and pocket the difference. Refund slips can be created for consumers who do not really exist and the money pocketed. Merchandise can be purposely damaged to be purchased at a discount. Kickbacks can be received from a supplier. Two checks can be written for one invoice and the duplicate amount split between employees at both ends. The list is endless and opportunities go on and on.
Retailers attempt to deter theft in a number of ways. Inventory control systems are used to detect shrinkage, but this is always after the fact. Security guards may be used at employee entrances and security staff roam the selling areas looking for theft. Magnetic devices are attached to expensive garments which sound an alarm if taken through a magnetic detection field at the consumer's exit. However, an employee could remove the magnetic device at the point of sale without a purchase of the item because the release mechanism is not integrated with the cash register system. Magnetic labels are pasted to merchandise which will also set off the alarm at an exit, if they have not been peeled off. These too can be deactivated at the cash register without purchasing the merchandise.
Closed circuit video cameras have been installed in warehouses and selling areas to monitor employees as well as consumers. One security person may be expected to watch as many as ten screens. The closed circuit cameras are not in the dressing rooms where a shoplifter may wear a garment under others to steal it. Other retailers put heavy metal wires through the sleeves of expensive garments and attach the wire to an audible alarm or to a stationary pole so the garment cannot be removed. How does a person try on the garment? A sales clerk must release it. Therefore, a sales clerk may release it to a friend who wears it home. Wires through sleeves attached to poles or alarms are quite inconvenient for the consumer, perhaps even acting as a deterrent to purchasing the merchandise in that store.
Retailers divide accounting functions among their employees to attempt to prevent theft. Therefore, in theory, one person is not able to circumvent the system. This is often expensive and cost prohibitive. Surveillance, security checkpoints, physical controls such as magnetic tags and additional employees to watch each other add up to higher costs for retailers and result in higher prices to consumers.
Present methods of applying price labels to merchandise are costly and prone to error. Merchandise placed on the selling floor is labeled in a variety of ways, among them stick-on pressure sensitive labels and hang tags. Many of these labels are machine readable and the price lookup table in the cash register must match the price tags. Mistakes are often made and merchandise is sold at the wrong price. When a label is machine read at the point of sale, a computer looks up the price for the merchandise and displays it. If the prices differ, the consumer can insist that he pay the lower price marked on the label.
Retailers often have sales and mark down the price of merchandise. This may be done by applying a second label over the original label or by creating a new label or hang tag. Some retailers hand write the discounted price over the original price. The lookup table in the cash register system must also be updated with the current price. The initial cost of labeling items is labor-intensive, and the costs associated with marking down a price label incur additional costs. Many states have laws that require each piece of merchandise to have its own price label, thus shelf labels displaying the price of merchandise is redundant and contributes to additional costs for retailers. Computer driven shelf labels are disclosed in U.S. Pat. No. 4,002,886 (Sundelin) and U.S. Pat. No. 4,500,880 (Gomersall et al.). Present electronic merchandise display labels are only used to display prices on shelves, are not self-contained and are not used as intelligent security devices. Current attachable hang tags and labeling systems for merchandise are one-time use hang tags or labels, are not reusable, cannot be automatically changed to display new prices and are not intelligent security devices.